SUPREME COURT OF QUEENSLAND

Transcription

1 SUPREME COURT OF QUEENSLAND CITATION: Simpson & Ors v Jackson [2014] QSC 191 PARTIES: FILE NO: 5346 of 2014 DIVISION: PROCEEDING: ORIGINATING COURT: CHERYL DIANN SIMPSON (plaintiff) TERRY STEPHEN SIMPSON (plaintiff) RYAN MATTHEW SIMPSON (plaintiff) v GARY JACKSON (defendant) Trial Division Application Supreme Court of Queensland DELIVERED ON: Delivered ex tempore 23 July 2014 DELIVERED AT: Brisbane HEARING DATE: 23 July 2014 JUDGE: ORDER: Applegarth J 1. The contract between the plaintiffs and the defendant dated 23 November 2013 was validly terminated; 2. I order that caveat number be removed pursuant to section 127 of the Land Title Act; 3. The plaintiffs application be dismissed 4. The plaintiffs pay the costs of the respondents and incidental to the proceeding to be assessed on the standard basis CATCHWORDS: CONTRACTS PARTICULAR PARTIES VENDOR AND PURCHASER where parties used standard form contract where there was no factual dispute between the parties where notices given after 5pm were taken to be received on the next business day where the contract provided that if notice of a satisfactory building and pest inspection was not provided by 5pm on date of inspection the seller would accrue a right to terminate where the buyers failed to notify of satisfactory building and pest inspection to the seller s solicitors before 5pm where shortly after 5pm

2 2 the seller exercised the right to terminate where after receiving the termination notice from the seller the buyers responded by sending a satisfactory notice of inspection whether the notices were to be taken to have been received in the same order the next business day COUNSEL: M F Wilson for the applicants M R Bland for the respondents SOLICITORS: A M McNally for the applicants Patrick Ebert & Associates for the respondents [1] HIS HONOUR: In this proceeding, the plaintiffs, who I will refer to as the buyers, seek specific performance and other relief in respect of a contract dated 23 November By his defence and counter-claim, the defendant, who I will refer to as the seller, contends that the contract was terminated and seeks an order that the caveat over the property be removed. There is no factual dispute and the issue between the parties is one of the proper construction of the contract in the undisputed circumstances. [2] Although the application and the cross-application are cast in terms of applications for summary judgment, the parties are agreed that the determination of those applications should proceed on the basis of the view that I take of the proper construction of the contract in the circumstances. Neither seeks to have the determination of this matter deferred on the basis that there are competing arguments that do not make it the proper subject for an application for summary judgment. In other words, the parties accept that whichever construction I approach as the preferable one should result in either the grant of specific performance and other relief or the making of a declaration and the removal of the caveat. [3] Shortly stated, the parties entered into a contract for the sale of a property at Newport. That contract was entered into on 23 November Steps were taken under the contract, including the payment of deposits. The contract is in the standard REIQ form and contains clauses in relation to building and pest inspection. Clause 4.1 makes the contract conditional upon the buyer obtaining a written building report from a building inspector and a written pest report. Clause 4.2 provides that the buyer must give notice to the seller that: (a) (b) a satisfactory inspector s report under clause 4.1 has not been obtained by the Inspection Date and the Buyer terminates this contract. The Buyer must act reasonably; or clause 4.1 has been either satisfied or waived by the Buyer. [4] Clause 4.3 states: If the Buyer terminates this contract and the Seller asks the Buyer for a copy of the building and pest reports, the Buyer must give a copy of each report to the Seller without delay.

3 3 [5] Clauses 4.4 and 4.5, which assume importance for the purpose of the present application state: 4.4. The Seller may terminate this contract by notice to the Buyer if notice is not given under clause 4.2 by 5 pm on the Inspection Date. This is the Seller s only remedy for the Buyer s failure to give notice. 4.5 The Seller s right under clause 4.4 is subject to the Buyer s continuing right to give written notice to the Seller of satisfaction, termination or waiver, pursuant to clause 4.2. [6] I should also refer to relevant provisions in clause 10.4 concerning notices. They provide for notices to be in writing and that they may be given to a party s solicitor. They contemplate that notices can be given by, amongst other things, by being sent to the facsimile number of the other party or its solicitor. Subclauses 10.4(4) and (5) assume importance: (4) Notices sent by facsimile will be treated as given when the sender obtains a clear transmission report. (5) Notices given after 5 pm will be treated as given on the next business day. [7] The inspection date under the contract was agreed to be 9 December Accordingly, the seller acquired a right to terminate under clause 4.4 if the notice provided for in clause 4.2 was not given by 5 pm on 9 December Shortly before 5 pm and, it seems, at about 4.57 pm, the buyers solicitor sent an inspection satisfaction notice by facsimile to the real estate agent. However, sending it to the real estate agent was not a form of notice contemplated by clause The notice is recorded as having been sent at 4.57 pm on a fax imprint on that document. [8] The seller s solicitor, having not received that notice, at 5.06 pm or perhaps 5.07 pm, but in any event, shortly after 5 pm, forwarded by facsimile a termination notice. The termination notice stated: We note that the buyer has not given notice in accordance with clause 4.2 of the contract. Accordingly, we are instructed that the seller terminates the contract pursuant to clause 4.4 of the contract. [9] The solicitor for the buyers, having received that notice of termination at around 5.06 pm or 5.07 pm, sent back to the solicitors for the seller the notice that had earlier been sent to the real estate agent, which stated that the buyers were satisfied with their building/pest inspections, together with a copy of the notice of termination upon which was written: See attached page sent to agent at 4.57 today. [10] The sending of that notice occurred after the notice of termination. [11] Precision is required about these things, the facsimile transmission reports accord with that sequence of events. In other words, the notice of termination was both sent and, it seems, a report of its being transmitted was received before the solicitors for the buyers sent the notice that I have just mentioned and likewise received a transmission report.

4 4 [12] After that, the seller, through his solicitors, confirmed that the seller s position was that the contract had been terminated. The buyers, through their solicitor, contended otherwise, and gave advice about the finance condition having been satisfied. However, it became obvious when the seller did not execute transfer documents and adhered to the view that the contract had been terminated that there was to be no settlement. As a result, the buyers brought this application for specific performance and damages in respect of costs that they had incurred by reason of the contract not settling. [13] It is accepted that the issue before me concerns the proper interpretation of the contract and in particular the correct interpretation of clauses 4.4, 4.5, and [14] The matter essentially turns on this issue: What should be taken to be the effect of clause 10.4(5) in stating that notices given after 5 pm will be treated as given on the next business day? The buyers position is that clause 10.4(5) deems both notices in this case to have been given simultaneously at midnight on 9 December 2013, being the commencement of the next business day, or at least at some other simultaneous time the next day, that is, 10 December In any case, its position depends upon the argument that the effect of clause 10.4(5) is that the notices were given simultaneously. [15] I am unable to accept that argument for the reasons that were exposed during the course of exchanges with counsel from which I benefited greatly. It seems to me that clause 10.4(5) says no more than that the notices are to be treated as being given on the next business day. It does not state that they are taken to be given simultaneously or in some different order to the order in which they were, in fact, given. [16] That clause has an application not only in respect of notices of the present kind but other notices contemplated by the contract. It is important that parties be able to count, as it were, the number of days that have elapsed, so that they can consider whether obligations exist and whether rights have accrued. It is unremarkable that, for the purpose of counting days, something that occurs after a specified time, such as close of business, or after 4 pm or after 5 pm, is treated as having taken place the next day. Here the contract does not say that the notices are taken to have been given at midnight or at a nanosecond after midnight. They are taken to have been given the next day. Where the parties rights depend upon the sequence in which notices are given and whether, for example, a party has purported to terminate either effectively or invalidly so as to possibly constitute repudiatory conduct, it is important that legal rights are not lightly disturbed unless the contract contains clear words to that effect or that construction is necessary in order to give the contract a businesslike and workable operation. [17] To construe the contract as if it provided that notices that had been given in a certain sequence are taken to have been given simultaneously would give rise to surprising and unintended results. It might negate rights, including a right to terminate. Indeed, if sequences were different, it might on one view negate the right which clause 4.2 creates and which clause 4.5 preserves to some extent. [18] The buyers argued that clause 4.5 aids their preferred construction of the clause, in which there are deemed circumstances of simultaneous notification. However, that really depends upon the argument concerning simultaneous operation. And I do not consider that that argument is a persuasive one.

5 5 [19] It is also argued that the simultaneous giving of notices should be adopted as a preferred interpretation, as it leads to the result of the performance of the contract as originally envisaged by the parties. I am unable to accept that submission. It is one thing to say that the contract should be construed so as to preserve the validity of a contract, rather than have the contract declared void and unenforceable. Then there is the general principle that contracts of this kind should be construed so as to give them a proper businesslike interpretation and to uphold the intentions of the parties as expressed in the contract. [20] At a broad level, the intention of the parties was that the property should be sold and that the sale should go through to completion. However, that is to state the intentions of the parties at a level of generality. Insofar as the parties intended that the contract be performed, it was subject to more specific rights which gave both parties rights to terminate in certain events. And so it can be said that the parties intentions were that, if the buyer did not give a written notice to the seller of satisfaction under clause 4.2 by 5 pm on the inspection date that the seller should have a right to terminate. And in that context, it can be said that the principle of contractual certainty should enable a party who has a right to terminate to exercise that right without fear that that right will be subverted, rendered nugatory or turned back upon them somehow. [21] It seems to me that, even if I were to accept the buyers argument that these notices should be deemed to have been given simultaneously, notwithstanding the absence of words to that effect, it would not result in the conclusion that written notice by the buyer was given before termination. It would simply lead to the perplexing conclusion that both notices were given at precisely the same time, leaving everyone to guess which, if either of them, were effective. That is not a construction that should be preferred. I do not see any reason to suppose that, in the case in which it is said both notices are given simultaneously, that one should at the same time say that one or the other is somehow to be preferred as trumping the other. So I do not consider that the construction contended for by the buyers achieves the result for which the buyers would contend. [22] If, on the buyers argument, the seller s termination notice was of no effect, it could equally be said that the buyer s notice was of no effect. One might say, well, that would simply leave the contract on foot with the buyer still not having given notice to the seller. [23] In my opinion, the sensible interpretation of the provisions is that clause 10.4(5) treats these notices as having been given on the next business day. That has implications as to the reckoning of time. But they are not to be treated as having been given in a different sequence or simultaneously. [24] For the other reasons that were exposed in the course of arguments, I consider that the notice of termination was therefore effective. It was effective to terminate the contract. [25] The contract having been terminated, the buyers do not have an entitlement to specific performance or the damages they seek. And the seller is entitled to the relief sought in the counterclaim, being a declaration that the contract of sale between the plaintiffs and the defendant dated 23 November 2013 has been validly terminated and an order that caveat number be removed pursuant to section 127 of the Land Title Act. Subject to hearing from the parties, it would seem to me that the other consequential orders would be that the plaintiff s claim be dismissed and that there be orders as to

6 6 costs. Subject to hearing from counsel, I should think that costs should follow the event.